Good afternoon, ladies and gentlemen, and welcome to the MeridianLink Second Quarter 2024 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we'll conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 8. I would now like to turn the conference over to Gianna Rotoloni. Please go ahead. Good afternoon, and welcome to MeridianLink's Second Quarter Fiscal Year 2024 Earnings Call. We will be discussing the results announced in our press release issued after the market closed today. With me today are MeridianLink's Chief Executive Officer, Nicolaas Vlok, and President and Chief Financial Officer, Larry Katz. Before we begin, I'd like to remind you that today's conference call will include forward-looking statements based on the company's current expectations. These forward-looking statements are subject to a number of significant risks and uncertainties, and our actual results may differ materially. For a discussion of the risks, uncertainties, and other factors that could affect our future financial results and business, please refer to the disclosure in today's earnings release and the periodic reports and filings we file from time to time with the Securities and Exchange Commission. All of our statements are made based on information available to us as of today, and except as required by law, we assume no obligation to update any such statement. Please note that other than revenue, all numbers in our remarks are on a non-GAAP basis, unless otherwise stated. A reconciliation to comparable GAAP metrics can be found in today's earnings presentation, which is available on our investor relations website and as an exhibit to the Form 8-K furnished with the SEC just before this call. With that, let me turn the call over to Nicolaas. Thank you, Gianna. Good afternoon, everyone. Before speaking to our quarterly earnings, I want to start by commenting on our announcement earlier today that Chris Maloof, President of Go-to-Market, has decided to leave the company to pursue another opportunity outside of our industry. I want to thank Chris for his contributions over these past five years. He's helped build a highly capable go-to-market and product teams that I am confident will lead the next chapter of MeridianLink's growth. I wish Chris well in his next chapter. I'm excited to announce that Larry Katz, our CFO, has been named President of MeridianLink. Larry's deep experience in banking and consumer lending, as well as his years leading SaaS companies at scale, give me great confidence in his ability to lead our commercial efforts. Larry has done an exceptional job integrating into our company, building confidence and trust with our team and our customers, and I'm excited to partner with him on our next leg of our journey. We also announced this morning that Elias Olmeta will be joining in late August as Chief Financial Officer. Elias is a proven CFO, having served as CFO of Mitchell International, a provider of SaaS solutions to the automotive and insurance industry, and most recently at Vistage Worldwide, a subscription-based professional services business. Elias currently serves on the board of AutoCanada, Canada's largest automotive dealer group and public company. Elias and Larry worked together in their careers at JPMorgan Chase, where they've gained deep understanding of our industry. Larry will continue to serve as Chief Financial Officer until Elias's start date. I'm confident that with these changes, we continue to strengthen our management team with proven SaaS leaders who have deep industry knowledge and have operated successfully at scale. I'm excited to partner with both Larry and Elias in their new roles. With that, let's turn to our results. We delivered a strong second quarter against a continued challenging macro backdrop, achieving GAAP revenue of $78.7 million, or 4% growth year-over-year, and adjusted EBITDA of $31.8 million at a 40% EBITDA margin, meeting the high end of our guidance range for both metrics. Our free cash flow was $12.4 million. As a leading vertical SaaS company, we continue to successfully execute our land and expand strategy while also generating strong profitability. Once again, this quarter, GAAP revenue and adjusted EBITDA grew in the face of continued market headwinds, including multi-year lows in auto lending and generational lows in mortgage. Our performance highlights the resilience of our business model, the continued demand for MeridianLink One end-to-end lending platform, and our disciplined execution. This demand comes from both new and existing customers who select MeridianLink to enable their digital progression journey to compete and win in this market. I'd like to take a moment to comment on recent industry trends that highlight our customers' continued push to digital. Our strategic partner, Jack Henry's recent 2024 Strategic Priorities Benchmark Study showed that 97% of financial institutions plan to enhance lending solutions, and 80% plan to increase technology spend within the next 2 years. Credit unions, in particular, are bullish on technology budgets as a necessary investment to compete for the consumer's debt wallet in an increasingly digital world. Based on a recent report published by DigitalBankingReport.com, which offers insights on digital transformation trends in the banking industry. 19% of financial institutions plan to enable digital lending within one year. We, too, are seeing these trends in our strong sales activity as mid-market financial institutions continue to turn to MeridianLink as a trusted partner to execute their digital lending strategy. With that, I would like to speak to our continued success expanding share of wallet within our existing customer base. Cross-sell continues to drive demand as our customers invest to further automate their lending capabilities with MeridianLink One. This quarter, we continue to see momentum cross-selling consumer lending customers on MeridianLink Mortgage. This buying behavior highlights the trend we are seeing of customers leaning into digital mortgage transformation in anticipation of the market recovery. Among these cross-sell wins, a long-standing $3 billion AUM MeridianLink Consumer Lending customer adopted MeridianLink Mortgage, MeridianLink Mortgage Access, and our patented debt optimization solution. With full Debt Wallet visibility of its borrowers, this credit union's loan officers are now equipped to offer fast, personalized services and support. Due to the power of our platform, our customers can increase acceptance rates, boost cross-sell opportunities, and deepen client relationships, all of which drive engagement and revenue. This quarter, we also continued to win high-value, new logo deals. For example, we won a $2 billion AUM bank who adopted our home equity and credit card modules through MeridianLink One. This was a big win, as this customer previously had an on-premise home equity solution from a core provider and referred all credit card inquiries to their competitors. With MeridianLink One, the customer is now fully in the cloud and manages their own credit card program. Our platform generates immediate ROI upon go live, which made it an easy decision to go with MeridianLink to evolve their digital lending strategy. Next, I want to further spotlight the ROI that our customers can achieve by implementing our platform. In Q2, Three Rivers Federal Credit Union went live with both MeridianLink Access and Opening and cut down loan application times from two days to approximately two hours. With these efficiencies, Three Rivers has improved the member experience while increasing completed application rates. This is a significant achievement in today's challenging lending market and a further proof point that automation through MeridianLink One delivers strong returns. This quarter, we also enhanced our product capabilities through a new integration between MeridianLink Insight, our business intelligence solution, and MeridianLink Collect, our collections product. With this new connectivity to Insight, customers can now access advanced analytics to run their businesses, including a new Payment Propensity Index powered by AI that incorporates the probability of payment on delinquent loans. This is a great example of the differentiated capabilities MeridianLink offers, built on our deep experience and knowledge of our end market. Finally, we announced a partnership with Conductiv, a leader in providing missing permission data to meet underwriting guidelines. Through a pre-configured integration with MeridianLink One, our shared customers leverage AI for alternative decisioning, which allows them to approve more loans and serve more consumers quickly. For example, due to this new integration, Everwise Credit Union has seen lenders achieve up to 47% lift in approval rates without increasing expected losses. With our extensive partner network available through the MeridianLink One platform, we are able to rapidly bring to market the most innovative capabilities that enhance customer lending processes. Overall, these Q2 highlights reflect our continued success as the most trusted financial services technology platform for our customers. From automating their lending processes across different lines of business, to adopting innovative capabilities such as AI to improve efficiency and customer experience. With over 25 years of in-depth expertise, we continue to differentiate ourselves as a leading vertical SaaS provider in the lending software industry. With that, I'll turn the call over to Larry to take us through the financials and guidance. Thank you, Nicolaas. I'm honored and humbled to take on the president role at MeridianLink. I appreciate your and the board's confidence in me. I'm excited to continue to partner with Nicolaas and our leadership team to drive the next leg of MeridianLink's growth. As I shared in last quarter's call, I'm here because I believe in the power of our platform to enable our customers to compete and win in the market. Over these past months, I've gained even greater excitement for the opportunity to grow this business organically and inorganically. There's a lot of opportunity here, and we are just getting started. I'm deeply committed to this mission and look forward to further engaging with our customers, partners, and employees to help lead the next chapter at MeridianLink. I'm also excited to welcome Elias Olmeta as CFO. Elias is a proven SaaS CFO, having successfully scaled SaaS and services businesses organically and through M&A. He's a smart, analytical, commercial leader, and we share the same vision and goals for the CFO role. I'm looking forward to partnering with him and the rest of the leadership team to drive commercial execution and operational excellence across this company. Turning now to our results. MeridianLink demonstrated solid performance in Q2 in the face of continued macro headwinds. We generated GAAP revenue of $78.7 million, up 4% year-over-year, led by lending solutions revenue growth of 11%. Adjusted EBITDA was $31.8 million, or a 40% margin, and grew 17% year-over-year. Both GAAP revenue and adjusted EBITDA were in line with the high end of our guidance range. We generated $12.4 million of free cash flow and ended Q2 with $93 million of cash and cash equivalents. Total debt was $475.1 million, and excluding debt issuance costs and cash, net debt was $377.8 million. The company executed several significant capital markets activities in the quarter. In May, we took advantage of a favorable market window and successfully repriced our existing $426 million term loan, reducing interest expense by approximately 51 basis points. Due to strong institutional demand, the repricing was oversubscribed, and we were able to opportunistically raise a $50 million fungible add-on to the repriced term loan at par. During the first half of 2024, we returned $74.3 million of capital via stock repurchases. We have $61.3 million of repurchase authorization remaining. These share buybacks are consistent with the capital allocation framework I articulated last quarter. As outlined, we will strategically repurchase our own shares when trading at a discount to intrinsic value. Before going into more detail on Q2 results, I would like to share some context of the current macro environment. Today, we are managing our business through three headwinds, which we expect will normalize, but in the near term, are impacting our customers and constraining our growth. First, community banks and credit unions are facing lower deposit flows post-COVID era stimulus, which is weighing on loan volume growth. During those stimulus years, FIs benefited from strong deposit inflows and invested in yield-generating assets, including auto loans. Deposit flows have since slowed due to both contracting monetary policy and the availability of higher-yielding alternatives, such as money market funds. Meanwhile, asset durations, such as auto loans, have extended. This has resulted in credit unions and community banks seeing highly elevated loan-to-deposit ratios, which, combined with weaker credit performance, has led FIs to tighten credit and lower origination volumes. OEM captives have stepped in to meet the auto financing gap in order to move inventory from dealer lots. We view this shift as temporary, but to date, we have not seen our customers participate pro rata in the modest industry growth forecasted by industry sources. We expect that when rates start to come down, community banks and credit union balance sheets will normalize and unlock volume growth. We are starting to see early signs of improving quarter-to-quarter volume trends across our customer base. Second, used car affordability has yet to normalize back to pre-pandemic levels. Affordability of used cars continues to be out of reach for many due to higher prices and elevated financing rates. Higher used car prices have resulted from limited used car inventories post the COVID era spike in used car demand. We expect that as higher new car inventories work their way to used car lots, used car inventories will rise and prices will fall, though it may take several periods to see this impact on used car prices. We also expect affordability will improve with lower financing rates, but today, financing rates remain elevated. Third, mortgage unit volumes continue to be at generational lows. We're beginning to see improving mortgage volumes consistent with MBA forecasts, but volumes are still roughly 50% below 25-year averages. We expect that mortgage volumes, too, will improve with greater confidence and lower long-term rates. Despite these macro headwinds, our business model has performed quite well and proven to be resilient, in part due to our hybrid minimum and consumption pricing model. We continue to manage what we can control, generating healthy demand from new and existing customers while proactively investing in advance of a return to stronger volumes. Turning now back to our Q2 performance and starting with GAAP revenue. Looking first at revenue by source. Total GAAP revenue growth was 4% year-over-year, driven by 3% growth in subscription revenue, 6% growth in services revenue, and 20% growth in other revenue. Subscription growth was positively impacted by a one-time reduction in Q2 2023 revenue of $2.3 million, which related to a commercial dispute of a contract acquired via a past acquisition. Adjusting for this one-time revenue reduction in the prior year period, total GAAP revenue grew 1% year-over-year, and subscription revenue was flat year-over-year. Subscription revenue, which accounts for 84% of total revenue, included higher revenue from strong ACV release, offset by lower revenue from lower volumes. Further breaking down total revenue by solution type. Total lending software revenue growth was 11% year-over-year and accounted for nearly 78% of revenue. Adjusting for the one-time revenue reduction in Q2 2023, lending software revenue growth was 6%. Non-mortgage lending revenue growth was 14%, or 9%, adjusting for the one-time Q2 2023 revenue reduction, and accounted for 90% of lending software revenue. This growth was largely attributable to strong ACV release from existing and new customers. Mortgage-related revenue within lending software solutions declined 13% year-over-year and accounted for the remaining 10% of lending software revenue. This decline year-over-year is attributable to customer churn and strength in the year-ago quarter.... Mortgage volumes in the quarter were up year- over-y ear, but it will take time for volumes to push more customers above their committed minimums. Turning to data verification software solutions, revenue declined 13% year- over- year and accounted for 22% of total revenue. This decline was attributable to a 22% decrease in mortgage-related revenue, which represented 55% of total verification software revenue in Q2. This decline in mortgage-related data verification revenue was driven by the downsell of a single large customer. Moving to profitability. Adjusted gross profit was $56.8 million, or a 72% margin. This represents 230 basis points of improvement in operating leverage year- over- year, driven by increased productivity of our services team. Turning to operating expenses. Sales and marketing expense was $9.6 million, 12% of revenue, up 29% year- over- year. This increase is due to investment in our go-to-market team and higher costs for MeridianLink Live, our annual user event. R&D expense was $7.2 million, 9% of revenue, and declined 26% year-over-year, reflecting continued cost discipline, including lower staffing due to our previously announced restructuring. G&A expense increased 7% year-over-year to $9.8 million, or 12% of revenue. Adjusted EBITDA was $31.8 million, or a 40% margin. This represents 440 basis points of improvement in operating leverage year-over-year, and reflects our continued cost discipline while strategically investing in our go-to-market team to drive growth. Finishing with cash flow and leverage, we ended the second quarter with cash and cash equivalents of $93 million, an increase of $30.7 million from Q1. This increase was driven by our term loan upsizing, net of share repurchases. Total debt was $475.1 million, and excluding debt issuance costs and cash and cash equivalents, net debt was $377.8 million. Cash flow from operations was $14.4 million, or 18% of revenue, and free cash flow was $12.4 million, or 16% of revenue. I'll now turn to guidance for Q3 and updated guidance for the full year 2024. We are encouraged by our first half performance, which was driven by ACV release and disciplined execution, and we expect those to be the drivers of performance in the second half as well. Volumes were a headwind to growth in the first half, and though the interest rate outlook is improving, we expect the impact of anticipated rate cuts on our second half volumes and revenue to be gradual. Our current consumer lending volume trends do not yet point to visible signs of higher growth, and in line with lower growth expectations across industry sources, we expect that it will take time for a series of rate cuts to accelerate growth. We view rate cuts as a leading indicator of higher consumer volumes, though, as I discussed earlier, community bank and credit union loan-to-deposit ratios remain elevated and used auto affordability has not yet normalized. Mortgage industry sources forecast volumes to improve in the second half, though more modestly than previously forecasted. In mortgage, we expect the impact of these higher volumes on revenue to be modest due to committed minimums. Within this macro, we're focused on the things within our control, including disciplined cost management and stakeholder return. We continue to prioritize winning new logos and cross-sell mandates, releasing ACV to revenue, and innovating MeridianLink One to meet evolving consumer lending needs. With that, I'll share our updated guidance. For the third quarter, estimated total GAAP revenue is expected to be between $78 million and $81 million, compared to $76.5 million for the same period in 2023. This represents an estimated year-over-year change of 2%-6%. For the full year 2024, we expect total GAAP revenue to be between $312 million and $318 million, compared to $303.6 million for the full year 2023. This represents an estimated increase of 3%-5% year- over- year. We expect the mortgage market to contribute approximately 20% of GAAP revenue for the third quarter and for the full year 2024. To provide more color around the drivers of our total revenue, our mortgage-related revenue guidance includes declining year-over-year revenue despite improving volumes, as it will take time for the recovery in volumes to push our customers above their committed minimums. Additionally, we continue to realize the impacts of downsell of a single large MCL customer and customer churn. For our non-mortgage-related data verification software solutions, we expect to return to low single-digit growth year- over- year as the employment screening market reacts to job openings and labor turnover. For non-mortgage lending revenue, we expect mid to high single-digit growth year- over- year, driven primarily by ACV release. Now focusing on our Adjusted EBITDA guide. Third quarter estimated adjusted EBITDA is expected to be between $30 million and $33 million, representing adjusted EBITDA margins of approximately 40% at the midpoint. For the full year 2024, we expect our adjusted EBITDA range to be between $123 million and $128 million, representing adjusted EBITDA margins of approximately 40% at the midpoint. I'll finish where I started today. I'm very excited to take on the new challenge as president of the company, and look forward to engaging with our customers and our partners to lead the next leg of MeridianLink's growth. With that, Nicolaas and I are happy to take any of your questions, and I'll turn it over to the operator. Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star one. To withdraw your question, press star two. One moment, please, for your first question. ... Your first question comes from Andrew Schmidt from Citi. Please go ahead. Hey, guys. Thank you for taking my questions this evening. It's good to see the mid to upper single digit outlook for the non-mortgage lending software solutions piece. In maybe just drill down a little bit on that. It sounds like it's a lot of that is driven by ACV release, which probably goes back to better implementation efficiency. But beyond that, you know, any other drivers we should consider? And I think, you know, we think about filling the tank in terms of bookings pipeline there, how should we think about that? Thank you, guys. Thanks, Andrew. It's Larry. So you're right. It's so ACV is driving that, the second half, the second half non-lending, non-lending mortgage, sorry, non-lending, the non-mortgage lending software growth. Sorry about that. It is what's driving the growth is bookings, and we've had really strong pipeline and strong bookings, you know, through last year and through the beginning of this year, and it's release of that to ACV. There's a little bit of, as you said, services, you know, kind of executing services more efficiently and reducing lead times is a little bit of that, but it's really a function of our success on the go-to-market side, and that translating from bookings through implementation into revenue. Offsetting that, of course, as I mentioned, is, you know, a little bit of volume headwinds, but that will, you know, we're expecting that to gradually recover. Got it. Thank you, Larry. Then maybe I can switch to more of a product question. You know, there is a real scarcity of account opening solutions out there. You have one of them. In as you articulated, deposit gathering is in high demand from FIs. So maybe you could talk about, you know, demand trends that you're seeing there for account opening, and then, you know, if there's any additional investment that's going into that product to improve it. Thanks a lot, guys. Hi, Andrew, and thank you for the question. It's Nicolaas. Yes, we've seen demand for account opening in our customer base and also in new logo. We have our own account opening solution, which we think is a good fit to the mid-market, and we continue to market it as a standalone, but more importantly, as a key component of MeridianLink One, because once you start using the platform, the consumer spans the whole platform, and our philosophy is it starts with the onboarding at the account opening timeframe. We also have account opening partnerships with folks out there that may have a more niche solution or a specific offering that a customer would like to implement. So we offer integration into MeridianLink One through our APIs, which continues to expand our ecosystem and also have us participate that way. In terms of product investment, we continue to invest in user experience and the digital front end, making it faster and easier to open up an account, and also include partner integrations that would automate the process, more. Think of fraud, think of kind of ID verification, any ability to tier it up where there is not a lot of hands touching it, but becoming digital and touchless. And basically, as the consumer enters information, it becomes immediately verifiable, and when the button gets hit, it's not a long wait for the process to conclude. So from our perspective, we think of our solution as a great fit combined with MeridianLink One. We also provide flexibility through our partner marketplace and our API set, and we continue to invest digital front-end workflow, automation, and partner integrations that would speed up the whole account opening process. Super helpful. Thank you very much, Nicolaas. You're welcome. Your next question comes from Parker Lane, from Stifel. Please go ahead. Hi, this is Matthew Kikkert in for Parker. Thanks a lot for taking my questions. I guess just start with the changes in the leadership that you announced this morning. Are there any expected, you know, changes to, you know, more than structure, specifically the go-to-market strategy moving forward? Hi, hi there. This is Nicolaas again, and thank you for the question. We, we don't anticipate any changes at where we are. Chris is one of those rare individuals that you work with in your career that excels at a lot of things, and from a MeridianLink standpoint, he put us on a great path with our roadmap, our products, our platform, and our go-to-market organization. With Larry's background and skill set in banking and SaaS enterprise businesses at scale, I feel it's a great time where Chris is spreading his wings and taking on a whole new challenge as the CEO of a in an unrelated industry. And we wish him well, but also we are well-positioned with the leadership team in the go-to-market organization. I want to highlight, Larry's role is larger, larger than just go-to-market. It's basically the whole commercial part of the business, which will include our services and support, our customer success organizations. And the philosophy on the role that we've created is it's a kind of the full customer journey, the whole commercial journey that the customer engages with MeridianLink One. We as a team have expected efficiency gains by doing that. We think we will see it. And at this point in time, with Larry taking on the broader role and Elias coming in and the experience that he brings to the table, I don't anticipate further change. We kind of at a place where we really have made the changes. We've announced what we want to announce, and it's heads down, moving forward, executing. Understood. That sounds good. And then secondly, there's been a downtick in customer accounts the past couple of quarters. I wonder if you could give a little color on what the right mix is here going forward, and how long you would expect these trends to continue? Sure. Matthew, it's Larry. So we had a little more net churn in the quarter. As you can see, it's slowing. As I indicated last quarter, we expected it to slow, and it slowed a little bit this quarter. If you look at the trailing twelve months, average net churn is about 14, and this was net 11. Still with the same concentration that we talked about last quarter, where it's heavily concentrated in the IMBs, mortgage brokers, specialty finance. You know, these are the smaller clients for whom, you know, sometimes maybe they have a level of distress or maybe they, they're combining, or maybe the, the—in some cases, MeridianLink One platform isn't, it isn't the right fit for their needs, meaning we offer more capabilities than they're really able to take advantage of. So, it will continue to slow, and over the coming quarters, it'll be lumpy. And, you know, one thing I might in addition to customer account, which is important to look at, I'd also, I think it's important to look at ARR per customer, and we disclose ARR, and we disclose customer accounts. And if you know, as you look at that, the ARR per customer for lending solutions is up into the right, and it is for total as well. You know, and that's really a function of a couple of things. It's part of our expansion strategy, right? So, as we cross-sell additional modules, revenue goes up. It's also our target mix towards higher revenue customers, the larger customers. And it's also a function of some of the churn that we're talking about here. That's – those are smaller dollar customers and exiting the platform because they're not – they're smaller clients, and they're not as strong a fit for our platform. So, I think that's an important way to think about it as well, ARR per customer. Terrific. Thank you very much. Your next question comes from Saket Kalia from Barclays. Please go ahead. Okay, great. Hey, Nicolaas. Hey, Larry. Thanks for taking my questions here. Nicolaas, maybe the first question for you is, you know, within the consumer lending part of the business, non-mortgage consumer lending, you know, I think we've talked a lot about sort of used cars and the automotive market. Can you just remind us how big of a portion of that business comes from kind of used cars? And then also, what's the second and third largest chunks of volume that maybe we should be tracking to sort of see the upswing as rates go down? Does that make sense? Hey, Saket. Yes, it does. So kind of just big picture first. The non-mortgage consumer lending component, auto lending is about half of the consumer lending business. Of that half, about 70% of the volume and revenue is tied to pre-owned, where 30% or so is tied to new vehicle. Cox Automotive, J.D. Power are great sources for data on both. If you also look at Manheim, the Manheim index, you'll find good pre-owned data around the Manheim or Manheim environment. You can find good information, kind of the New York Federal Reserve in the past, they have published consumer data, kind of with some focus on auto. You can also find in the credit bureaus like Experian, I know they have some data out there that, that's also quite interesting in terms of consumer sentiment, consumer behavior, kind of, what they see from a consumer credit standpoint tied to auto lending. Those are all sources I would point you to, in which we also track and use for our own forecasting with, in the quarter. I think the next part of your question was, oh, volumes. Auto is clearly, from a volume standpoint, a pretty big factor, for us. Thereafter, it kind of breaks down somewhat more equally. There's not any consumer loan channel that I would say stand out with kind of the same light shined on it than auto. You can... In our business, personal loans, credit cards, HELOCs are all pretty buoyant loan channels for us. There's less data around personal loans in the market. You would kind of need to look at TruStage and some bank data that you would need to track and follow. Credit card, there's more data, generally speaking. Also, the credit bureaus publish data on kind of credit card call it metrics. And I would say you can find a decent amount of data around MBA and other mortgage industry forecasting environments. Got it. I would add to your question on them, so. Yeah. Larry, anything- Very appreciated, but by the way. Larry, maybe for my follow-up for you, understanding that—and by the way, congrats on the transition. I mean, maybe just focusing on the go-to-market part of the role, understanding that it's still very early days, what are some of the strengths and maybe opportunities that you think about within the go-to-market organization as you think about MeridianLink over the next three to five years? Yeah. Thank you. Look, Chris built a really strong organization here with a great team, and so. And I think we've got the strategy pointed in the right direction. So I think the starting place is in a really, really good place. You know, this is gonna be the first time that we put all of the customer-facing teams, meaning sales and marketing and service and customer full customer care, the entire customer journey under one leadership. And I think that's important at this stage of growth. I think it sets us up for the right next, you know, for the next chapter here. Because I think it's really about delivery for the customer end to end, and connecting all the way from marketing through delivery of services. And I think that's gonna be a meaningful opportunity for us to set us up to scale, become more efficient, and frankly, just deliver better customer experiences, which ultimately drive better execution, better cross-sell, you know, revenue growth, et cetera. So that's gonna be a meaningful area of focus for me. And you know, I think the connectivity that we have end-to-end in the business with Elias as well is gonna really be a great partnership to help, you know, to help drive that entire commercial execution to scale this business. All super helpful. Thanks, guys. Your next question comes from Alex Sklar from Raymond James. Please go ahead. Great. Thank you. Larry, just following up on one of your answers earlier to Andrew's question around the success you're having on the go-to-market side. I just wanted to ask if you had could provide some more color in terms of what you're seeing from the sales force in terms of productivity and how you're viewing the opportunity to maybe invest more behind that success, or if you think the sales force is about the right size right now. Thanks. Thanks for the question. So it's one of the areas I'm going to focus on. You know, today we've got really strong sales efficiency. If you just look at our sales as a percentage of revenue compared to any metric, we're efficient. I think we're well-sized right now for, you know, for our strategy. We are seeing a bit more, you know, with the turning of expectations around rates, there is a bit more of demand, of inbound demand, as customers look at accelerated growth and kind of continue to open their, you know, continue to get more excited about further investment in the business. So I do think there's a little bit more front-end demand. But I think our team is well-scaled at this point, and we'll want to look at balancing that across, you know, across the various product groups and across new existing customers and things like that. But I think it's a very... My current view walking into the seat is that it's well-sized, well-scaled, and we'll share more on future calls. Okay, perfect. And then I don't know who wants to take this one, Nicolaas or Larry, but just in terms of the mortgage cross-sell into your consumer lending base, I know it's been a top cross-sell booking for several quarters. Can you talk about that penetration into the consumer base, in terms of a logo or an ARR opportunity? And then any commonality in what you're replacing? I know you called out the win this quarter, Nicolaas. Thanks. Yeah. We continue to see demand in our depository taking customer base, and we also are fairly deliberate in providing focus in that specific market segment. We view the cross-sell opportunity with MeridianLink One as the platform as significant. The Debt Wallet optimization playbook around that, where you can have a holistic view across the consumer's Debt Wallet and make decisions, what's in the best interest of the whole Debt Wallet, is resonating with our customers. The pipeline continues to build. Deal momentum from our perspective is solid. Part of the reason why we are engaging with our customers and seeing the success we're seeing there is, folks want to get in front of the expected mortgage volume return on their retooling now, while it's still a slower period for them before they start seeing more activity. We compete against a broad array. I would say above us, you can see ICE Mortgage, which is the old Ellie Mae, and then there's probably a half dozen, either point solutions, which is not integrated as a platform like we are, that varies from legacy, more on-premise to cloud-based solutions. And then there's also some, of course, with what I would call also more legacy-based solutions in the mortgage space. Probably, about a dozen or so competitors that you see it in different segments or at different times, but none with the platform approach across the full consumer Debt Wallet. Okay, I appreciate that color, Nicolaas. Maybe just one clarification on that. And I think in the past you've said, like, X percentage of your consumer customers take mortgage. Is that, is that meaningfully marched up, or is it still something that's, well, north of kind of 70+% opportunity in green space? Thanks. Alex, I don't recall the specific reference to 70%, but from my perspective, there's a real sweet spot and a sizable sweet spot in our customer base. If it goes towards the lower end, they tend to not be in mortgage. They need to have a little bit more of a balance sheet behind them to be in the mortgage business. I would venture out to say somewhere between a third and a half of our customers have the right to play in the mortgage market, based on my perspective, and we are seeing good engagement with that subset today. All right, great. Thank you. Your next question comes from Koji Ikeda from Bank of America. Please go ahead. Koji from Bank of America, your line is now open. I will go to the next- Let's move Koji to the back and move on to Spencer. Your next question comes from Spencer Lebow from BTIG. Please go ahead. Hey, guys, this is Spencer on for Matt VanVliet from BTIG. Just had a couple questions for you guys. You guys kind of hinted at earlier, you guys are expecting demand to obviously trend up with the rate cuts, but if rate cuts happen as soon as September, you know, where should we expect benefit? Should we expect more of a benefit in the mortgage side of lending or the non-mortgage, like auto and consumer? Thank you. Thanks, Spencer, for the question. This is Larry. If I heard you right, you're asking where—if rates come down, where are we gonna see more of a benefit in the immediate term, whether it's mortgage or auto? Look, I, you know, we view, we view rates as an early, you know, as an early indicator of demand. It's not kind of a one-to-one, you know, one-to-one ratio of impact, but it's clearly a leading indicator that volumes will come, and this is probably why we view it as more gradual, you know, gradual return based on rates. I'd say in the auto business, you know, rates are going to help with affordability, but truthfully, as rates have started to come down, we've not seen a change in affordability in our core market, meaning in used car. And so that's driven by a bunch of the dynamics that I shared, you know, in my prepared remarks. And that's going to be more a function of used car prices, and rates and balance sheet liquidity and community banks and credit unions. So I think that as rates come down, it clearly will help, but I think it's going to take some time for that to kind of work its way through, you know, into real volume growth, and I think that's what you're seeing both in our industry forecasts, as well as in our guide as well. On the mortgage side, on the other hand, you know, we are seeing real responsiveness to rates and, you know, there was... I saw, I saw some articles today about how rates are at recent lows, even today. You know, you will see rates coming down, and I think that will drive volume, and we're starting to see some of that, and you're seeing some of that growth in the mortgage business and the mortgage forecast. You know, but that said, as you look at kind of the distribution of mortgages out there by rate, we're not really going to see big pickup in volume on the refi side until you kind of get into the five handles or below. That's where the real, you know, kind of the bulk of the mortgages out there are. And you'll start to see some pickup in, you know, in purchase, perhaps as rates start to come down. But I think it's going to take some time until, you know, we'll start to see some acceleration, but I think it's really going to take some time for rates to be lower until we really see that re-acceleration. Yeah. Thank you so much for, for that response. I guess I just one more question. You know, if you guys can just provide some more color on how sales trends are differing, you know, I guess, versus banks versus credit unions and, you know, maybe also new customers versus existing customers. Thank you. I apologize, but the audio didn't come through very clearly. Can you just repeat that question? Yeah, guys, can you hear me now or no? ... Yes. All right, yeah. Can you just provide some color on how sales trends are differing with banks versus credit unions, and also with existing customers versus new logos? Thank you. Sounds good. Existing versus new, I think, is the best place to start. On the new logo side, it's a slower market from a enterprise sale deal closing cycle standpoint, and it has been, I would say probably for over a year, year and a half now. We are developing strong pipeline. We continue to build the book on new logos and new logo pipeline. My expectation is we're gonna see somewhat of an improvement in the back half of this year into 2025 around new logo wins and new logo pipeline. On cross-sell, where existing customers continue to invest into MeridianLink One as a platform, that is strong and I would say strong to very strong, as customers already made the investment and they now want to get more efficiency or more benefit from their investment into the platform. Between credit unions and banks, credit unions today roughly makes up two-thirds of our depository taking customer base, and banks one-third. There's probably a somewhat larger new logo opportunity just purely based on the size numbers and size. But I would say outside of b... I can't really say there's a significant difference in what they're buying or how they're buying. I think it's more based on the solution that they are looking at and what they are solving, and there's more similarities between the two than differences. I think maybe on the banking side, I can highlight compliance. I think there's more conversations with banking prospects and banking clients on certain compliance requirements. But outside of that, I think both are starting to improve, and I expect both new logos to continue on bank and credit union side to strengthen back half this year into next year. Thank you very much. Your next question comes from Chris Kennedy, from William Blair. Please go ahead. Yeah, good afternoon. Thanks for taking the question. I mean, clearly the macro has been a headwind over the last 18 months or so, but when you think about a more normalized environment, what type of growth profile do you think MeridianLink has? Hey, Chris, it's Larry. Thanks for the question. Look, I'd start by... You know, in the past, we've talked about our growth algorithm of roughly adding up to, you know, kind of mid-teens growth. And I think that's about right, and I'll just kind of bridge it from where we are and to how we get there. You know, as I said, we got kind of, you know, mid- to high single digits ACV release based on bookings, and that's both new and cross-sell. And that's kind of where we're seeing it and where we're guiding to. You know, price and churn are roughly offsetting each other, and maybe there's a little bit of opportunity there to net positive. And, you know, the real headwind right now is volumes, as we talked about, right? That's a negative today. And as that flips towards the positive and then gets back towards kind of more, what I'd call normalized volume growth, which is, you know, historically in kind of the mid to mid-high single digits, you can really see a path to, you know, a mid-teens grower. And so, you know, the delta from here to there is really it's volumes, right? And, you know, the way that I... You know, we've talked about this in the past in terms of coiled spring, but I think the macro is, you know, it is really the drivers and the headwinds that I was talking about really points to those elements of the coiled spring, right? We're laying the foundation with additional ACV, but as, you know, as those respective headwinds, meaning liquidity and used car affordability and mortgage volumes start to return, it's gonna really, you know, we will see acceleration in growth, and that's how we'll get back towards our targeted growth algorithm. Great. Thanks for taking the question. Thanks, Chris. Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star one. Your next question comes from Koji Ikeda, from Bank of America. Please go ahead. Yeah. Hey, guys. Thanks for taking the questions here. I wanted to circle back to that downsell of that Mora Data Verification Services customer. And just, you know, I totally get that there was a downsell there, and totally understandable, but wanted to ask if there's other customers in that segment that are of similar size, and just trying to think of the potential risk of another one, you know, either downselling or was this really just a one-off, you know, mega-type customer in that category? Hi, Koji. Good to hear from you now. This is Nicolaas. First of all, it's a unique situation, which is not a normal course of business, and the downside and it's a top five DVS customer, but we don't expect the situation to repeat itself, and it's also from an event perspective, more one-off. So from my standpoint, I don't expect a continuation of it, and I also don't expect a repeat of it for us. Okay. Okay, that's, that's helpful. And in the answer to a prior question, there's the average interest rate of, you know, the high, a five handle. It needs to get lower than that for things to really, you know, kind of start churning. Not churning. Churning is the wrong word, but, you know, really moving on the volume side perspective. And so I just wanted to try and ask you a question of, have you thought about what that demand curve begins to look like? You know, is it pretty linear once you hit that 5% mark, or does it really start to hockey stick at a certain level, you know, maybe below that? I mean, just trying to understand how you guys are thinking about or modeling where volumes could go once it breaks that threshold lower. Hey, Koji, it's Larry. Look, there's a lot of... There's a bunch of forces at play there, and there's a lot of opportunity as rates come down to those kind of levels, right? And so I wouldn't guide towards a true sensitivity, but we will see as, you know, we have seen even in the recent rate environment with rate expectations coming down, some increase in mortgage volumes in line with the MBA, and that's starting to tip customers above their or contracts above their minimums. And so we will continue to see that translate into revenue and growth. I think, you know, there can be quite a bit of opportunity as rates get down into those fives and fours, and folks refi and can unlock some of that trapped value that they have in their home, both through refi and also through purchase volumes that have been, you know, constrained due to the lock-in effect. Got it. Thank you. Thanks so much for taking the questions. There are no further questions at this time. I will turn the call back over to Nicolaas Vlok, CEO, for closing remarks. Thank you. As we wrap up, I want to extend my deepest gratitude to our incredible team for their unwavering dedication and hard work in delivering a solid Q2 performance. I'm excited to partner with Larry in his role as president and welcome Elias later this month to MeridianLink. I also want to acknowledge our valued customers for placing their trust in us, and our partners for their ongoing collaboration and support. By working closely together, we continue to deliver innovative solutions that drive value and growth. We look forward to speaking with you again soon, and enjoy the rest of your day. Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.